Tata Power’s decision to stop power sales to three Rajasthan-based distribution companies could help the company to get new avenues for its sales. Tata Power on January 3 said it was looking to make alternative arrangements to sell this power, 400 megawatt (mw) once the project is fully commissioned, from its 4,000-mw Mundra power plant.
The company is now operating three units (2,400 mw) in Mundra. The power, made available from the power purchase agreement, or PPA, which stands cancelled, is now free to be sold, said company sources.
That could give Tata Power the opportunity to go ahead with short-term sales of power, which is sold at market prices. Tata Power has an option to sell power at merchant prices. But, it may not stay for long, said Rupesh Sankhe, power sector analyst at Karvy Broking.
Some experts said if a PPA was terminated, existing buyers could also be sold the power. Apart from Rajasthan, the project also supplies to Gujarat (where it is located), Maharashtra, Haryana and Punjab. Tata Power terminated a PPA with three distribution companies (discoms) — Jaipur Vidyut Vitaran Nigam, Jodhpur Vidyut Vitaran Nigam and Ajmer Vidyut Vitaran Nigam — around ten per cent of the total capacity of Mundra.
The discoms have not been paying their dues, amounting to Rs 96.3 crore, to the company. Not receiving dues places additional pressure on the company, already losing money on current sales. After the new coal export regulations of Indonesia, the 4,000-mw project that imports coal from the archipelago, lost its cost competitiveness.
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